LEAD: Wachovia incurs huge 3rd-qtr. loss on subprime, Wells Fargo merger+
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[October 22, 2008]

LEAD: Wachovia incurs huge 3rd-qtr. loss on subprime, Wells Fargo merger+

(Japan Economic Newswire Via Acquire Media NewsEdge) NEW YORK, Oct. 22_(Kyodo) _ (EDS: ADDING BACKGROUND INFO)

Major U.S. bank Wachovia Corp. said Wednesday it incurred a staggering third-quarter net loss of $23.89 billion (2.4 trillion yen) due to subprime turmoil-related losses and expenses associated with an upcoming merger with major U.S. bank Wells Fargo & Co.



Wachovia is set to be acquired by Wells Fargo based in San Francisco, California, in the fourth quarter after the Federal Reserve Board approved on Oct. 13 Wells Fargo's application to take over Charlotte, North Carolina-based Wachovia.

The third-quarter loss stems mainly from $18.8 billion in "goodwill impairment reflecting declining market valuations and the terms of the merger with Wells Fargo" and a $6.6 billion credit loss provision, it said.



The net loss in the July-September quarter is the largest quarterly net loss incurred by a U.S. financial institution since the summer of 2007, when the global financial crisis erupted with the U.S. subprime mortgage meltdown.

The net loss represents a sharp downswing from a net profit of $1.62 billion a year earlier.

Wachovia's stock price plunged after the failure in mid-September of major U.S. brokerage house Lehman Brothers Holdings Inc., as Wachovia was known in financial circles as one of the banks plagued with massive amounts of subprime mortgage-related assets.

Wells Fargo outbid Citigroup Inc. of New York for Wachovia.

Copyright ? 2008 Kyodo News International, Inc.

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